The Hong Kong Airport Authority will not pay its annual dividend to the government this year in order to fund the new runway. The government is set to lose $5.7 billion in revenue.
The Airport Authority made the decision despite earning its highest profit since the new airport was opened 17 years ago.
Construction on the third runway will begin in 2016 and and is expected to be completed by 2024.
Local media reported on Thursday that the authority will confirm ways to fund the project shortly. It is expected to cost more than HK$141.5 billion. The authority had previously suggested funding the project through three channels:
- Collecting an “airport construction surcharge” on departure from the airport;
- Stop paying their annual dividend to the government;
- Borrow money from banks.
The AA initially set the airport construction surcharge at $180, but is expected to decrease that amount upon request by the government.
The third runway project was proposed by the authority in 2010 because of increasing traffic at Hong Kong’s only airport. The plan included reclaiming 650 hectares of land north of the airport for the third runway, as well as expanding the existing terminal two for immigration clearance.
The AA argued the plan was necessary as the airport would “reach saturation in the near future”. It said it was necessary to expand the airport “in order to maintain its competitiveness”.
It announced on Wednesday that the Hong Kong International Airport handled 64.7 million passengers in the fiscal year 2014-15, an increase of 6.6% compared to the previous year. It said this was a “record-breaking figure” that made it among the ten busiest passenger airports in the world. It also said the airport maintained its status as the world’s busiest cargo airport for the fifth consecutive year.
The expansion proposal was eventually approved by the Executive Council in March. However, the proposal was met with fierce opposition.
The plan was criticised by some for the effect it would have on wildlife north of Lantau Island. Some local environmental groups raised concerns over the effects of the construction project on the lives of Chinese White Dolphin.
The authorities said the positioning and directions of the third runway would comply with international safety standards.
The AA, a statutory body, earned HK$7.2bn in 2014-15, a 12 percent increase from the previous year. The AA’s net profit also jumped 12% from $6.4 billion compared with last year. Sales revenue at the airport also increased by 10.5 percent year-on-year to HK$16.4bn, the highest in its history.